Government Gets Rs 127 billion Tax from Telecom Sector in FY15

Pakistan Telecommunication Authority (PTA) reported, that after getting Rs 119.3 billion in taxes from the telecom services’ subscribers and Rs 7 billion from telecom operators, the government has grossed a total of Rs 126.3 billion during the outgoing fiscal year 2014-15 (FY15).

General sales tax made the main part of the contribution with Rs 45.8 billion collected by the Federal Board of Revenue (FBR) from the telecom sector. A huge amount of Rs 73.5 billion have been paid by the public for using the telecom services in terms of custom duties, withholding tax and other taxes in FY15.

Government Gets Rs 127 billion Tax from Telecom Sector in FY15

The telecom operators paid Rs 7 billion under various domains such as initial and annual license fee, annual spectrum administrative fee, universal service fund (USF) and R&D fund contributions, numbering charges and license application fee to the regulatory and revenue authorities in the period under review. On the other hand, the revenue authorities fell short of the target immensely in the year under review when compared to the previous year’s figures, as the telecom sector’s contributions to the national fund dropped by 48% in FY15 to Rs 126.3 billion as compared to total of Rs 243.3 in the corresponding year.

Regardless of the fact that the overall telecom sector attained 7% growth in the previous fiscal to complete all time high revenues of Rs 463.497 billion in FY14, their income fell by 3% to Rs 449.55 million in FY15, whereas cellular mobile operators earned Rs 317.11 million in FY15, seeing 2% decline as compared to Rs 322.68 million in FY14.

The industry experts recognized this reverse trend in balance sheets of both government and telecom companies mainly to the unnecessary burden of taxation on the telecom sector and unhelpful regulatory strategies by the Pakistani authorities, hindering the sector’s growth in the outgoing year and likely to continue this year as well.

The professionals said that the removal of almost 40 million connections in the last fiscal following the bio-metric verification drive, suspension of SIMs’ sales for three month during the bio-metric drive, and the 19% provincial GST on usage of data services in Punjab turned out to be a suppressor in FY15.

In Pakistan, cell phone customers are paying maximum taxes as compared to rest of the world with 53% of the overall taxes, including 19.5% on call and voice services, 14% on WHT and now 19.5% on additional service, which was imposed by the Punjab government on above 2 mpbs speed.